how many of you still own a cassette player or an eight-track tape player?
okay how many of you just asked what is an 8-track tape player? well the 8-track tape player was the mp3 or the spotify of my teenage days. here is what one looks like. most eight track tapes held approximately 50 minutes of pre-recorded music similar to a cassette tape or to an album. they became popular in the late 1960s and survived through the 1980s at which time they were replaced first by the cassette tape and then by the cd. the eight track tape player lived through a complete cycle of the product life cycle. so now that you know a little more about portable music history lets take a look at the theory we call the product life cycle so that you can see and understand how to apply this to today.
i like to begin with a little clarification. the theory is referred to as the product life cycle. so that you have little better understanding of this concept i want to rename it for todays discussion. what we are looking at is the industry product life cycle. so what is the difference? too many times students think of the product life cycle as only pertaining to their product. the theory however applies to the life cycle of the product from an industry perspective. the difference is this as, a company i can introduce a new product for my company after the product category has been available to the market for a long time. as an example, as a group we could decide to produce a new soft drink the slu slammers. now this would be a new product being introduced into the soft drink market which has been around for a very long time. therefore, following the plc terminology we would not be at the beginning of the product life cycle but somewhere in the middle or the end. so we would have to create a marketing mix strategy to fit that point in the plc and not somewhere prior to that. i think as we walk through this discussion things will become a little more clearer. lets get started.
now the plc is a comparison of a product category’s growth, sales over time. so on the left axis we are measuring growth in terms of dollars in sales. across the horizontal axis we are measuring time. the product life cycle is divided into four categories or life cycles. we will label each of these as we move through our discussion. the purpose of the plc is for the product manager to know and understand where a product is at in the plc and the appropriate strategic actions that must be taken within each of the cycle stages. with this being the case modify our chart a little bit by drawing four lines horizontally across equally spaced and label each of the rows with one of the four ps as they are the basis for the strategic actions. starting in the left most column we find the life cycle stage of introduction some refer to this as beginning. now this is very important for you to remember. the introduction stage of the product life cycle only applies to a product category for which the product has never been offered to the public before. this is the very first time this product has ever been introduced to consumers.
i am going to age myself but here are a few examples of what i have seen in my life: the microwave oven, the 8-track tape player, the cd and the electric toothbrush just to name a few. new, airplanes existed before i was born and so did cars i am not that old. so what are the characteristics of the introductory stage of the product life cycle. heres what we know. fill in each row in the first column with the following. in terms of product there is one and only one version of the product and it is yours. no other company has offered the product before or you’re just the second or third company to offer this product. in terms of price pricing is going to be very high, higher than what it should be. this is called skimming pricing which you will learn more about in the pricing module. you charge a high price to recoup the investment in product development. in terms of place the distribution is going to be extremely limited almost specialized. very few businesses will be willing to sell the product. you may start with specialty stores. in terms of promotions you are educating the consumer about the product. you are telling them what it is what it will do and where they can find it. you have to convince the consumer that they need the product in their lives. so if i am the second or third company that will introduce the product to the market these are the parameters around which i have to develop my strategy lets take a second and reflect on this stage of the product life cycle. what products have you seen in your lifetime that would fall into this category? now be careful make sure you are describing a totally new product and not a modified product. a smartphone is a modified product from the original cell phone that was introduced back in the 1970s. it was referred to sometimes as the brick because it looked like you were holding a brick up to your ear. okay lets continue our journey.
the next stage of the plc is referred to as the growth stage. just as the name implies is what is happening in this stage of the life cycle. the growth in sales is starting to rise and rise sharply. people are now beginning to buy the product it is becoming popular. now the problem is with a growth in sales is inviting or attracting competition. in this stage the factors driving the marketing strategy are changing. from a product perspective the product is being modified and there are now different versions available to the consumer. while still limited the offerings are developing and will start to become very prolific towards the end of this life cycle stage. competition is growing. pricing strategy is changing. you are now becoming a little more competitive and prices are following a little bit. pricing is based on differentiation. the more different your product the easier it is to charge a different price. distribution wise, place you are starting to expand the number and types of outlets through which you sell the product. this is normally referred to as limited distribution. promotionally you are emphasizing your product features you are starting to get into comparison style promotions showing how your product is superior. your emphasis starts to look at benefits of your product over others. you are still trying to push some education perspective. so in this life cycle stage your strategy has to focus on setting your product apart and possibly introducing your product to the market.
the third stage of the product life cycle is called the maturity stage. i refer to this stage as the survival of the fittest because that is what it becomes. here is what is going on in each of the 4ps. for product this is the highest level of competition you will face as a firm. there are several products available to the market and it seems like there are more coming out daily. in this stage you are doing a lot of product modifications trying to make your product stand out and be differentiated. there are so many versions your consumer may become confused. for price very highly competitive. in this stage you are trying to value price a concept you will learn more about in the pricing module or you are competitive pricing which may drive down your profits. for place you are selling this product anywhere the customer may be or may want to buy it. this is referred to as an extended distribution it is everywhere. promotions are doing a couple of things. first it is very comparison oriented. you are trying to downplay the competition and highlight all of the positives of your product. take a few minutes and watch several automobile commercials for the same product category. you will see this happening. you are strongly pushing differentiation value and benefits. in this stage of the plc you will start seeing products and possibly even companies disappearing from the market and competition. some are being bought by competitors, others are just disappearing. now before we move on see if you can identify at least three to three products you have purchased within the last two weeks that would fall into the maturity stage of the product life cycle. what did you make your purchase decision upon when you bought them. okay lets take a little bit different strategic look at this point.
remember i said earlier that this is the industry product life cycle and then said a few words about why to look at it this way. this is the perfect time to point out why again. think back to that soft drink example. the soft drink industry is in the maturity stage of the product life cycle. if we would create the slu slammers and since this is a new product to our company and we followed the introductory stage marketing mix strategy how successful would we be. lets just pick on the pricing aspect alone. what would happen if we use the skimming approach charging a higher than normal price in the maturity stage? how much of our product would people buy if we are charging five dollars for that bottle of soft drink and everyone else is charging one dollar and ninety eight cents? this is why it is important to make sure you have the correct perspective.
time for the final stage decline. now at this point the product has survived the life cycle and is about to go away. again remember we are talking about the industry and not just your product. your product may just be a dog product that you are not managing correctly. refer back to the boston consulting group matrix discussion. for this product the market is moving on and the product is not or cannot move on. a good example of this would be the hand-held calculator. it is in the decline stage because while some are still sold most people no longer need to buy a calculator because they carry a smartphone or a smart pad or some other electronic device that has a calculator app. the characteristics of the decline stage are, product-wise the industry has reverted back to just one or two versions available. most companies have left the industry and competition is limited. no new product is being developed. pricing is interesting. either a skimming pricing charging higher than market or a clearance pricing approach is used. place you have reverted back to a limited approach as you are minimizing costs associated with this product and just trying to liquidate what you have in stock. promotions are normally abandoned totally. the promotions that are instituted are limited in application. this product is done. the only thing left to do too is to write the obituary for this product. hold on to that thought